Scalability is a challenge due to the nature and design of this technology, especially due to the verification method that decentralization provides.
Scalability in Blockchain refers to the ability of a network to grow and adapt as its users and transactions increase. It is one of the obstacles that this technology posed from the beginning.
Growth in this context not only refers to the ability to process more transactions, but also to store data and manage the number of nodes running on the network.
This problem occurs because the blocks of decentralized networks have a limit size, which is equal to a limit of transactions per second. In this way, the transaction capacity is limited.
Likewise, it happens with the information capable of being stored and the nodes, since the larger the information, the more complex it is to administer and manage these two aspects.
It is a complex problem, because if the size of the blocks is increased, scalability can be improved, but at the same time it also increases the complexity of the network and the difficulty of reaching a consensus.
Blockchain technology today enjoys great adoption, however, to achieve massive use, it is necessary to first achieve scalable and not limited Blockchains. Thus, many sectors could implement large-scale projects that are based on decentralization.
To delve deeper into this topic and the solutions that are being developed, though, it is best to address the challenges and then the solutions.
Challenges Posed by Blockchain Scalability
The fundamental challenge of Blockchain lies in the difficulty of simultaneously developing the three key characteristics of Blockchain, that is, scalability, decentralization and security.
Achieving high scalability is feasible at the risk of lower security. While greater security and decentralization would come at the risk of lower scalability. This is not an absolute truth, but rather this trilemma reflects how difficult it is for Blockchain to expand in these areas.
One of the reasons why Blockchain is complex to scale is that nodes must verify each transaction and add it to the blockchain. So as the size of the network increases, it takes longer for nodes to verify each transaction. This results in much slower transaction times.
Another challenge around scalability is transaction pricing. The truth is that most major Blockchains are expensive to transact. Therefore, technologies that solve this problem need to be cheaper.
This happens in the case of Ethereum, which today handles slow transaction times and high commissions. Let us remember that its speed is 15 transactions per second, much lower than Visa’s 24,000 transactions per second, for example.
As solutions for scalability are found, decentralized Blockchains face other challenges in implementing the solutions: One of them is governance. Achieving consensus is a complex issue among large decentralized networks, which is why innovation is a challenge.
Glimpsing a Scalable Future
Scalability is a huge challenge for Blockchain technology to the extent that it has been complex to advance it without sacrificing another of the two main qualities that identify it. However, by dreaming of a fully scalable future, a general expansion of decentralized finance may be envisioned.
Companies from various sectors are currently adopting this technology, despite the fact that scalability represents a limitation. Therefore, great scalability would allow general adoption.
Centralized platforms currently continue to be the best options in terms of banking transactions, due to their speed and ease of use. Beyond that, there are no great reasons to continue using them and Blockchain technology far exceeds its benefits.
By Audy Castaneda
